Darktrace share price forecast: bleeding set to continue

The Darktrace (LON: DARK) share price crashed by more than 13% on Monday, becoming the worst-performing stock in the FTSE 100. The stock has crashed by more than 30% from its highest level on record. This decline has brought its total market capitalisation to more than 4.83 billion pounds.

Multiple catalysts drag DARK

DarkTrace is a cybersecurity company that went public with much funfare this year in London. The company provides security solutions that are backed by artificial intelligence (AI) to companies like McLaren, Pacific Dental, HydroTech, and eBay, among others.

Are you looking for fast-news, hot-tips and market analysis?

Sign-up for the Invezz newsletter, today.

DarkTrace share price rose sharply after its initial public offering as investors cheered the company’s performance. Also, the firm provided investors with an exposure to the fast growing cybersecurity industry.

In its most recent results, the company said that its customer base jumped by 42% to more than 5,900. The company also boosted its annualised recuring revenue (ARR) by 45.9% to more than $381.5 million. This led to a revenue of more than $93.1 million while its gross margins held steady.

Most importantly, the company said that its business will keep doing well in the coming quarters. It boosted its forward guidance on both revenue and margins.

However, in the past few weeks, the DARK share price has been under pressure for several reasons. First, the company received a negative review from Peel Hunt, a well-known London broker. The broker said that that the company was worth about half where it was trading at.

In the report, the analysts said that some of the experts they consulted considered the company’s product to be a gimmick. The stock dropped by more than 20% after the report came out.

And on Monday, the stock declined after the company’s lock-up period expired. This means that the firm’s insiders are now allowed to sell their shares. In most cases, stocks tends to decline after the lockup period expires.

Darktrace share price forecast

The four-hour chart shows that the DarkTrace share price formed a double-top pattern at 993p between September and October. In price action analysis, a double-top pattern is usually a bearish sign. The stock managed to decline below the chin of this double-top at 724p on Monday.

It also moved below the 25-day and 50-day moving averages while the MACD has been in a bearish trend. Therefore, the stock will likely keep falling as bears target the key support at 600p.